Published PapersAlok, Shashwat., Ayyagari, Meghana. (Forthcoming) "Politics, State Ownership, and Corporate Investments", Review of Financial StudiesRead Abstract >Close >We document a political cycle in the investment decisions of state-owned enterprises (SOEs) by using the constitutionally mandated election schedule in India as a source of exogenous variation in politicians’ incentive to cater to voters. Using a project-level investment database, we find that SOEs announce more capital expenditure projects in election years, especially in infrastructure, and in districts with close elections, high-ranking politicians, and left-wing incumbents. SOE projects in election years have negative announcement returns, suggesting a loss in shareholder value. These patterns are not seen in nongovernment firms or in off-election years.

Published PapersBhowal, Subhendu., Subramanian, Krishnamurthy., Tantri, Prasanna. (Forthcoming) "Costs Of Job Rotation: Evidence From Mandatory Loan Officer Rotation", Management ScienceRead Abstract >Close >Job rotation inside an organization creates two conflicting effects. It disciplines agents by creating the fear that their successors may discover and report their hidden information. Thus, the agent takes actions that align with the principal's objective. However, job rotation can create a moral hazard. If information is soft and, therefore, non-verifiable, the principal cannot attribute blame to the agent or the successor. Agents shirk, thereby hurting performance. Thus, the importance of disciplining versus moral hazard effects depends on the availability of hard information. Using unique loan-level data, we show that job rotation hinders performance when the information is soft.

Published PapersTantri, Prasanna. (Forthcoming) "Creditor Rights and Strategic Default: Evidence from India", Journal of Law and Economics Read Abstract >Close >We examine whether higher creditor rights prevent strategic default. Borrowers who cross either of two thresholds are exempt from a creditor rights law in India. Using a loan day-level dataset, we find that loan performance is better when the law applies and that outperformance increases after a further rise in creditor rights. To discern the strategic motive, we use an unprecedented invalidation of the Indian currency whereby holders of high-value currency were forced to declare their cash holdings to banks. Defaulters exempt from the law showed a greater tendency to repay their loans during the ban period.

Published PapersAgarwal, Sumit., Alok, Shashwat., Chopra, yakshup., Tantri, Prasanna. (Forthcoming) "Government Employment Guarantee, Labor Supply, and Firms' Reaction: Evidence from the Largest Public Workfare Program in the World", Journal of Financial and Quantitative Analysis Read Abstract >Close >Using establishment-level employment and operating data, we examine the impact of the Indian government's employment guarantee program on labor and firm behavior. We exploit the staggered implementation of the program for identification and find that the program led to a 10% reduction in permanent workforce in firms. Firms responded to the adverse labor supply shock by resorting to increased mechanization. This significantly increased the firms' cost of production, thereby leading to a decline in net profits and productivity. These effects manifested primarily in firms paying low wages, having low labor productivity and greater output volatility, and firms located in states with pro-employer labor regulations.

Published PapersJain, Ankit., Tantri, Prasanna., Thirumalai, Ramabhadran S. (2019) "Demand Curves For Stocks Do Not Slope Downwards: Evidence Using an Exogenous Supply Shock", Journal of Banking and Finance, 104, 19-30Read Abstract >Close >We analyze the price impact of an exogenous share sale by inside blockholders, who were forced to sell a part of their shareholdings due to a regulatory change in India. The affected firms experience a negative excess return of 4.5% during the issue week. Crucially, the price impact reverses in about 55 to 75 days after the event. Our results are consistent with the view that the long term demand curves for stocks are
at: a view echoed by classical finance theories. The short term price reaction to a sale is likely to be a result of temporary price pressure.

  • Page 1 of 3
  • >